I hear Thom always gets very upset when it comes to corporations not paying their fair share. I want to pose some questions though.
What is a corporation? It is an organization that employees people usually with the purpose of offering a good or service in exchange for money. If a corporation makes no money then how many people does it employee? In the long run a corporation that doesn't make money will not exist unless it receives funding from somewhere else so the easy answer is that a corporation without profits (other than a non-profit) will not employee any people because it will go out of business. When a corporation makes a profit where does that money go. A corporation is like an individual in this matter as it has the same choices: save, invest or spend. They do have one additional option and that is to distribute to their shareholders.
A corporation that saves its cash does what with it? This money typically sits in the bank and the bank turns around and uses such capital to make loans and such. If a corporation has a lot of cash they become targets for corporate take-overs as many companies would like to put that cash to more efficient usage than just sitting in the bank.
Investment for a corporation usually means investing in itself and its future. They can make capital investments in plant and equipment thus putting themselves in a position to make more money and hire more employees. As they make such purchases and hire more people they flood the economy with more money making it more feasible for their vendors to employee people. If corporations don't make these investments it will lead to a decrease in economic activity. Investments typically lead to higher share prices and increase value of the corporation.
Corporations can also spend money outside of capital. This can be money spent on employees, travel, entertainment, etc. Again the spending of money is money going back into the economy and spurs economic growth.
Distribution is an area whereby the company's profits is taken back by the owners/shareholders. What is the point of ownership of a company other than it is an investment for one's money. Almost every major corporation is owned by investors such as mutual funds, retirement funds, employees, retirees, etc. It is rare to see an individual own large pieces of big corporations. These distributions are typically in the form of dividends which are taxed on the individual level.
How much should corporations be taxed. When I listen to Thom's show I'm under the impression that he believes that corporations should be taxed at very high levels. What does this mean for the economy? If corporations are taxed at high levels it usually comes at the expense of those company's being able to make investment thereby slowing the growth of that company. On a larger scale it slows the growth of the entire economy. At the same time corporations usually mitigate any increase in cost including taxes by passing these expenses on to their customers. This means that consumers pay more meaning they have less for their own savings and investment leading further to a slow down in the economy.
Most corporations are owned by investment companies in the form of mutual funds or retirement accounts. If there is an increase in corporate taxes this tax money comes from these people/accounts. If taxes were lower than there would be an increase in corporate value which would either be a capital gain or possible distribution to these shareholders. So if we made it so that corporations were not allowed to earn a profit what would this do to our nation's retirement system? Why would any individual make an investment in business if they couldn't get a return?
I'm not saying that business's should not pay any taxes but corporations should not be taxed at high levels especially when the economy and job market are lagging. My personal opinion is that all corporations, large or small, should be offered a significant tax break for every employee that they hire. This could be a short term subsidy which would lead to major economic benefits as people go back into the work force and corporations have the ability to grow and invest thus spurring the entire economy.